894.6363/378
Memorandum by the Chief of the Division of Far Eastern Affairs (Hamilton) to the Adviser on Political Relations (Hornbeck)
Mr. Hornbeck: With reference to your memorandum of November [January] 11 on the subject of petroleum exports to Japan FE11 offers, in response to your invitation, comment as follows:
[Page 780]FE is in complete accord with the view expressed on page 4 of the memorandum under reference that the interests of the United States and of American producers and exporters of oil were served by the recent conclusion of agreements between the Netherlands East Indies and Japan. FE also concurs in the views that it is regrettable that Japan continues to receive from the United States a large share of its petroleum requirements and that in the event of war between Japan and the United States Japan would of course make use of petroleum products of American origin. However, the essential feature of such a situation would seem to be not the particular origin of Japan’s stocks of oil but rather the existence and extent of such stocks. Furthermore, it is suggested that the primary reason why, as stated above, the interests of the United States and of American oil companies were served by the recent conclusion of agreements between the Netherlands East Indies and Japan was the fact that Japan by that means obtained petroleum products in such quantity as, at least for the time being, to cause it to refrain from any attempt to seize by military force such oil supplies in the Netherlands East Indies as were deemed to be of vital necessity to Japan’s economy. If, irrespective of the means employed, effective steps are now taken to curtail materially Japan’s purchases of petroleum products it would seem almost certain that the time will come when Japan will take the situation into its own hands by attempting to meet its needs through attack and seizure—presumably in the first instance on the Netherlands East Indies. Unfortunately it is impossible to forecast with any degree of certainty the point at which restrictive measures would produce such a result but it is quite likely that in Japan’s present desperate frame of mind no great amount of restrictive action would be required to touch off an explosion in southern Asiatic waters—a development which it is believed should be prevented if at all practicable pending further clarification of the European situation.
In view of the foregoing FE of course concurs in the view that it would be well to avoid further legislation and the issuance of executive orders which would call for a substantial curtailment of exports of petroleum products to Japan. With reference to the question of urging the petroleum industry to exercise self-restraint with respect to its trade with Japan FE is of the opinion that, except as a last resort when no other means seem available, requests of private industry for assistance in furthering Departmental policy beyond the bounds of existing law and regulation and at substantial cost to such industry should be avoided. However FE would perceive no objection to intimating to such American interests as own or control tankers engaged in the carriage of oil to Japan that they may care to investigate the possibilities, which are said to exist, of obtaining equally [Page 781] advantageous charter parties for the carriage of other goods which, because of differing ownership, destination and intended use of such goods are more likely to further American interests. To such action could be coupled that of placing upon our restricted lists metal drums, containers and metal barrel hoops, the export of which could with warrant be prohibited on the basis of national defense and thus, while not creating unnecessary friction by preventing Japan from purchasing oil in the United States, retard and render much more difficult the carriage to Japan of petroleum products as “package goods”.
FE also offers for consideration the possibility that the present desire of the British Government to curtail oil shipments to Japan (a desire which is strangely at variance with its attitude in the past when it was fearful of the results of repressive measures taken or believed to be under consideration by the American Government) may be caused at least in part by the fact that unlike American oil interests which have thus far been able to transfer their funds from Japan to the United States, British oil interests are unable to obtain such facilities and therefore any increase in the British oil quota can only result in augmenting British-blocked funds.
- Division of Far Eastern Affairs.↩